Sign in toCleveland.com

Why toy stores are already fighting for holiday shoppers

Ava Dalessandro, 3, of Arnold, Mo., tries out the cars while shopping with her family at Toys R Us in Sunset Hills, Mo. Many retailers are offering holiday shoppers layaway again this year, but Avaas mother, Kayce, wonat be taking advantage of the offer. aThatas way too much work for me,a she said.
(Photo by Robert Cohen/St. Louis Post Dispatch/MCT)

"Toys are a good loss leader, because parents, grandparents and other people need to get something anyway."

CLEVELAND, Ohio -- The calendar says it's still 58 days until Christmas, but major stores like Best Buy, Walmart and Toys R Us are already taking swipes at each other trying to be top-of-mind for holiday toy shoppers.

Best Buy, Toys R Us and Target are willing to match competitors' prices on select items.

And every store, it seems, is flaunting its own list of must-have hot toys for the holidays.

Not only are this year's Christmas promotions earlier and louder than ever, they're also noticeably more aggressive, retail experts say, as more stores compete to be the first place where harried parents open their wallets.

"If a store can get inside the consumer's head before it becomes cluttered with the inevitable holiday 'to do' list, then the great deals, or fantastic assortment, or unique items, or whatever else the retailer is offering just might be top-of-mind when it's time to start shopping, " she said.

Rakesh Niraj, associate professor of marketing and policy studies at Case Western Reserve University's Weatherhead School of Management, noted that retailers "are coming off two to three really soft years, and while there are predictions that it will be a little bit better this year, everybody wants a piece of that 'little-bit-better' pie."

Promotions like layaway and price-matching are exclusively offered in-store as a way to increase foot traffic and "bring them into the store as many times as they can."

The same way supermarkets are willing to take a loss on milk in the hopes that shoppers will fill their carts with other higher-profit foods, retailers dangle attractive toy promotions as a way to bring parents into the store, he said.

"Toys are a good loss leader, because parents, grandparents and other people need to get something anyway," he said.

American families are expected to spend an average of $750 on the holidays this year, with the vast majority of that -- $421.82 -- on children and other family members, according to the National Retail Federation.

Its survey of nearly 9,000 shoppers found that 41.4 percent of us like to start holiday shopping before Halloween. Thirty-nine percent of shoppers wait until November; 16.2 percent start in December; and 3.5 percent wait until the last two weeks before Christmas to hit the malls.

Fighting online competition

Barbara Kahn, marketing professor and director of the Wharton School's Jay H. Baker Retailing Center at the University of Pennsylvania, said bricks-and-mortar stores this year seem especially eager to challenge the idea that the best deals are online.

"Some people who shop online will probably continue to prefer online, but the people who like to go to the store and touch things before they buy them, they want to feel like they're getting the best price, too," she said.

Ring said this year's earlier-than-ever promotions can be chalked up to the rapidly growing threat from online and mobile shopping.

Best Buy, for example, has been hurt as online retailers like Amazon.com encourage shoppers to use it as a showroom to physically check out products they plan to buy online, Ring said.

"Office Depot, Office Max and Staples are also struggling, and I think online has been a big contributor to that," he said. "Everybody has stepped up their efforts online."

More stores are also offering to match competitors' prices on popular toys, if customers can provide print advertisements and newspaper inserts listing the lower price. But they will not match online-only prices.

Even if consumers aren't buying online, they're still using the Internet to research items they're thinking about buying. Ring has read studies that say half of all purchases are looked up online, even if the person buys the item in the store.

"It's both bricks and clicks now," Ring said. "Everybody's trying to come up with something that's exclusive to them and that you can't get anywhere else. And once they find it, they're promoting it."

Toys are loss leaders

When Walmart decided to get serious about selling toys, it priced its offerings very aggressively, even lower than some of its other merchandise, said Robert Antall, managing partner of Consumer Centric Consulting LLC in Shaker Heights.

"The reason for this is it draws people into the store and they buy other things during the holiday season," he said. "Walmart is trying to get the customer to not only buy toys, but more while they are in the store. Toys R Us just wants to sell as many toys as possible."

"Toys are segmented into two categories: 'basics' like games and 'fashion' like the hot toys of the year. The basics are readily available and fairly predictable, so there is little risk of running out of stock on these. The hot new toys have a limited supply, so my speculation is both Toys R Us and Walmart will hold back some of this product as it becomes apparent what is hot."

Target has an exclusive partnership with Neiman Marcus to sell holiday gifts designed by Jason Wu, Oscar de La Renta, Diane von Furstenberg and Marc Jacobs. The items, priced from $7.99 to $499.99, will be available in-store and online starting Dec. 1.

Some stores are already offering the kinds of buy-one-get-one-half-off deals that shoppers usually see closer to the holidays, reinforcing the idea that quantities are limited and prices will never be this good.

"So parents think, 'I'd better get it now before it runs out,' " Kahn said.

Will layaway stay?

Niraj says layaway appeals to budget-minded consumers because even if they can't afford something right away, they can pay it off in installments without going into debt. Parents also like knowing they're guaranteed to get one of those hot electronic toys that other stores might run out of later.

But retailers like layaway, too, because it keeps bringing customers back into the store to make their payments, and possibly buy more.

Antall said layaway came back into vogue during the recession because consumers had trouble getting credit, but it creates a lot of work for retailers.

"It takes a lot of space to save the layaway items," he said. "At times, they get lost or damaged. Then customers sometimes fail to make payments or fail to pick up the merchandise. It is generally a once-a-year event that happens during the very busiest season and adds to the chaos of store operations at that time. Generally with all of the handling and errors, it is more trouble than it is worth.

"I think we are seeing the peak for layaway this year," he added. "When credit becomes more available and the economy improves further, I think layaway will disappear again."

Ring said that one thing consumers learned during the recession was that "to make every buck count, you're going to shop earlier and shop harder" and not necessarily buy the first thing that catches your eye.